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The Major Multinational Bank HSBC, is planning to enter the Indian real estate development funding sector using the Foreign Portfolio Investment (FPI) route, and it's also considering expanding into private debt investments in various sectors.
Hongkong and Shanghai Banking Corporation Limited, better known as its abbreviation HSBC, is a British universal bank and financial services group headquartered in London, England.
The bank is already a significant player in Asia's real estate private debt market and wishes to explore similar opportunities in India. They are currently assessing three to four real estate deals and intend to finalize at least one deal within the quarter, with investments ranging from 250 to 500 crore in each project.
HSBC's move through the FPI route offers greater flexibility in land financing, pre-approval financing and also addressing stalled projects, which aren't readily available through traditional banking channels due to Reserve Bank of India regulations. In the first half of 2023, HSBC India reported a wholesale lending book of $15.3 billion, up from $13.319 billion in December 2022. This lending included corporate and commercial exposures of $10.3 billion, $5 billion to non-banking finance companies and $1.9 billion to the real estate sector.
Internationally, HSBC Holdings is assembling a team to connect corporate clients with the expanding private credit market, using its existing relationships with mid-sized companies.
This move aligns with a trend where global investors like Carlyle, Franklin Templeton, Varde Partners, Oaktree Capital, PAG, Apollo Global Management and others are actively participating in India's private credit space, which has nearly doubled to $15.5 billion in assets under management for private debt as of December 2022. This growth is largely driven by global credit and distressed funds that have injected billions of dollars into the Indian real estate market in recent years, especially after the IL&FS crisis, when non-banking finance companies reduced their real estate lending to address liquidity and balance sheet concerns.
The Indian real estate debt market is estimated to be around Rs.1 trillion, and it is an attractive space for global credit funds due to the annual deployment of Rs. 2500-3000 crore by domestic fund managers, experts suggest.
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